B&Q is partnering the London Borough of Sutton in a trial of the Government's new Pay as You Save (PAYS) scheme, introduced yesterday.
Energy and Climate Change secretary Ed Milliband announced details of the scheme which helps homeowners pay for eco-renovations and is being piloted in several areas across the country.
'Green home loans' of up to £10,000 will be provided through supermarkets, DIY chains or local authorities and can be paid back over time through savings made on energy bills.
B&Q is leading the Sutton trial and will oversee full energy assessments of homes involved to understand how their energy consumption might be reduced, such as through draught proofing and introducing solar hot water.
The pilot scheme, which runs until April 2011, will then provide the funds for these improvements in the form of a 40% free subsidy and a 60% interest-free loan to homeowners which can be repaid over a period of 10-25 years.
Undertaking significant energy improvements will typically be an investment in the region of between £8,000 and £12,000, says B&Q. The payback period is considered to be long enough so that repayments will be lower than homeowners' predicted energy bill savings.
B&Q and Kingfisher UK ceo Euan Sutherland said: "We are delighted to be the partner for this innovative pilot scheme and this trial will be a great example of working in partnership with the local authority at Sutton. Whether it's a straight forward loft insulation project or a more complex eco-renovation we will have the products, friendly advice and services our customers will need to eco-vate their homes in the most affordable way."
The pilot scheme also partners sustainability experts BioRegional, The Energy Saving Trust and The Department of Energy and Climate Change (DECC).
The PAYS programme forms part of a government strategy to cut greenhouse emissions from housing by 29% by 2020. In future leading supermarket and DIY chains will be expected to offer complete packages insulating homes or installing renewable energy devices such as solar panels.
DECC has already been in discussions with a number of sectors including retail and banking over how the loans can be delivered.
Legislation will also be introduced to allow the loans to be attached to homes. With people moving house on average every nine to 12 years, homeowners may not have long enough to repay their loan before they move to ensure they save more on their bills than the cost of repayments. To combat this, green loans will be tied to the property rather than the person taking it out.
CBI's director of business environment Dr Neil Bentley said yesterday: "Given that all homes need to be properly insulated within five years, much more needs to be done now to get millions of households on board. Helping people overcome the upfront costs by rolling out pay-as-you-save schemes is a step in the right direction. But even if they are willing to sign up for these loans, this scheme Is still a few years away."
He added that the CBI has called for measures which will have an immediate effect on household emissions, such as council tax rebates for the most energy efficient houses, tax breaks to encourage firms to help staff insulate homes and a white goods scrappage scheme.